In a filing this week, Telefónica said it would offer €750 million worth of bonds to institutional investors, which would halve the Spanish firm’s stake in Telecom Italia from 14% to 7%.
Telefónica has long been part of the Telco group, which holds a controlling 22.4% stake in Telecom Italia, but this was dissolved last month following the withdrawal of other members including Mediobanca, Intesa and Generali.
Both Telecom Italia and Telefónica have important assets in Brazil, which has made the Spanish operator’s position a difficult one in terms of competition in the Latin American country.
The reduction is expected to ease this relationship, especially with anti-trust regulators in Brazil, which told Telefónica in December 2013 that it must exit its stake in Telecom Italia’s TIM Participações.
Telefonica told reporters that it wasn’t directly involved in the share sale, and the same group of investment banks – HSBC, JP Morgan and Société Générale – are running both the bond and equity sale.
The reduction should also please Egyptian tycoon Naguib Sawiris, who said he would look to invest $2 billion in Telecom Italia if Telefónica exited the group.
